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Income Tax - Highlights / Catch Notes

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Treatment to Forex loss incurred by the assessee on account of ...


Forex Loss from Derivative Transactions Deemed Speculative; Hedging Profits/Losses Considered Trading if Assets Exceed Forward Contracts.

February 12, 2022

Case Laws     Income Tax     AT

Treatment to Forex loss incurred by the assessee on account of derivative transactions as speculative transactions - When the assessee enters into a hedging transaction to minimize the possible loss from fluctuation in foreign currency, then profit or loss arises on account of appreciation or depreciation in the value of foreign currency held by it on conversion into another currency, such profit or loss would ordinarily be a trading profit or loss, if the foreign currency is held by the assessee on Revenue account or as a trading asset or as a part of circulating capital embarked in the business, if the underline asset is more than the amount of forward contracts entered into by the assessee. - AT

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